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6 No Credit Check Loan Red Flags

Welp. A kid just threw a baseball through your window and ran away before you could get his parents’ information. Now you need a loan to fix it. But what if your credit score isn’t exactly a home run? What are you going to do now?

So how can people with bad credit get a loan if an urgent need arises? One option is a “no credit check loan.” And if these loans sound too good to be true, it’s because they often are. Many “no credit check” loans are nothing more than financial traps designed to suck away as much of your paycheck as possible. Keep an eye out for these red flags before you end up in an unaffordable situation.

Be suspicious of lenders when…

1. They Don’t Care About Your Income

If a lender doesn’t want to check your credit, make sure that they do check your employment and income. Why? If a lender wants to verify that you’ll be able to afford to repay your loan, it’s a signal that they’re legitimate and not trying to walk you into a debt trap.

If a lender doesn’t check your credit or your income, then it’s likely that they’re trying to sell you a loan you can’t afford. This is a classic predatory practice, because if you can’t repay your loan, you’ll be forced to roll it over (extending the loan for another cycle) and you’ll pay additional fees to do it. Suddenly, you’re sinking further and further in debt, and your predatory lender is making more and more money directly from you.

This unfair practice is a hallmark of payday lending, and it can trap borrowers in unexpected debt for months or even years.

2. Short Payment Terms

Any good lender wants you to have a real shot at actually paying back your loan in full. A payday lender, on the other hand, wants you to be trapped into rolling over your loans so that you can give them money forever. They’ll require you to pay back the entire loan, with interest, after only a few weeks—and sometimes less!

Instead, find a lender that will offer you an installment loan. David Bakke (@YourFinances101), a finance expert at MoneyCrashers.com, says that one of the main benefits of installment loans is that they “usually come with fixed interest rates, meaning that you know what your monthly payment is going to be.” A good “no credit check” lender will be certain that you have a source of income and then work with you to create a repayment plan over a longer term that you can handle.

3. They Talk About Interest Rates Instead of APR

According to David Reiss (@REFinBlog), a law professor and editor of REFinBlog.com, “The annual percentage rate or APR shows the total cost of a loan, including fees and interest. APRs allow potential borrowers to make an ‘apples-to-apples’ comparison between loans. It gives you a full and clear picture of how expensive a loan really is.” In other words, it’s a number that many “no credit check” lenders would prefer you never see.

They’d rather show you a basic interest rate, even though federal law requires APRs be used in most cases. Not only can that hide all sorts of fees, but it forces you to do some pretty complex math if you want to actually know how much you’ll be expected to pay. Friends never make friends do complex math problems, so if a lender isn’t talking in terms of APR, they’re likely not your friend.

4. They Want Your Car Title

Some “no credit check” lenders will accept your car title in return for a loan. The car is serving as collateral, which means it’s being used to guarantee that you’ll pay. This might seem like a reasonable deal at first. After all, you’ll be fine as long as you pay it back, right? Well, that’s a pretty big “if.” Since the lender is holding your car’s title, they’ll be able to seize it if you don’t make your payments. In fact, a recent study from the Consumer Finance Protection Bureau found that 1 in 5 title borrowers will lose their car!2 You never know what financial surprises could happen and it’s too big a risk to gamble on—especially if you need your car to get to work. If you were in a desperate situation before, having to walk or catch the bus to work certainly won’t improve things. These loans are unsafe at any speed.

5. They Don’t Have a Customer Service Line

The best “no credit check” lenders should be willing to work with you to make sure you can pay off your loan, even if something unexpected comes up. That’s why having good customer service is so important. If you know you’re going to have trouble making a loan payment, you should be assured that there’s a number you can call for help. E-mail might feel like a more modern form of communication, but nothing is as efficient as talking to another actual person. There’s less potential for misunderstandings, and you don’t have to worry about whether they’re receiving your concerns. Any company offering loans to people with poor credit is either looking to help them or to take advantage of them (read more in How to Shop for a No Credit Check Loan). If they won’t even give you a way to talk to them, they aren’t worth your time or your trust.

6. They Have Bad Online Reviews

Much like a hotel or a restaurant, you want to be sure your lender has the best online rating possible. After all, you wouldn’t give your money to a burger place that makes people sick, so why should you give your money to a lender that’s trying to make you broke? You’ll get over that burger in a day or two, but a bad loan could make you nauseous for years. When people get ripped off, they don’t tend to be quiet about it. Heed their warnings. Taking just a few minutes to look at reviews could save money and pain.

Sure, there are a lot of red flags when it comes to “no credit check loans,” but that doesn’t mean your situation is hopeless. You may qualify for a “soft credit check” loan from OppLoans. A soft credit check doesn’t affect your credit rating, so there’s no risk when applying!

The next time you need a loan, do yourself a favor and watch out for the red flags that indicate you’re dealing with a predatory lender. Seek out a safe, responsible, soft credit check installment loan. You’ll be able to repair that broken window without damaging your credit.

About the Contributors:

David Bakke is a finance expertwho started his own personal finance blog, YourFinances101, in June of 2009 and published his first book on ways to save more and spend less called ““Don’t Be A Mule…” Since then he has been a regular contributor at Money Crashers.

David Hosterman (@CCMortgageLLC) is a credit and financial expert. He began working as a loan officer with Castle & Cooke Mortgage, LLC in 2008 and became a Branch Manager in 2015. David has been featured in CBS Money Watch, Forbes, MSN Money, and elsewhere.

David Reiss is a professor at Brooklyn Law School and director of academic programs at the Center for Urban Business Entrepreneurship. He is the editor of REFinBlog.com, which tracks developments in the changing world of residential real estate finance.

CA residents: Opportunity Financial, LLC is licensed by the Commissioner of Business Oversight (California Financing Law License No. 603 K647).

DE residents: Opportunity Financial, LLC is licensed by the Delaware State Bank Commissioner, License No. 013016, expiring December 31, 2019.

NM Residents: This lender is licensed and regulated by the New Mexico Regulation and Licensing Department, Financial Institutions Division, P.O. Box 25101, 2550 Cerrillos Road, Santa Fe, New Mexico 87504. To report any unresolved problems or complaints, contact the division by telephone at (505) 476-4885 or visit the website http://www.rld.state.nm.us/financialinstitutions/.

NV Residents: The use of high-interest loans services should be used for short-term financial needs only and not as a long-term financial solution. Customers with credit difficulties should seek credit counseling before entering into any loan transaction.

OppLoans performs no credit checks through the three major credit bureaus Experian, Equifax, or TransUnion. Applicants’ credit scores are provided by Clarity Services, Inc., a credit reporting agency.

Based on customer service ratings on Google and Facebook. Testimonials reflect the individual's opinion and may not be illustrative of all individual experiences with OppLoans. Check loan reviews.

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